The consequences of taking Social Security benefits early

Sherry – Georgia: I am widowed and not married. I lost my job at age 60. I worked for a company 14 years that does not offer unemployment benefits or pensions. I only had two weeks to find a job before my house payment was due. I had planned to work until I was 70 or at the least 66. The loss of my job was an unexpected event and although I updated my resume and went on interviews, I was unable to get a job in time.

I understand now that starting benefits at age 60 has severely affected the rest of my income-earning years. I am drawing $1,579 a month ($18,948 a year), which is $700 a month less than I would have received at age 66 had I been able to find work and defer filing. That $700 amounts to $8,400 a year forfeited because of my unfortunate set of circumstances. I also have discovered that Social Security rules will prevent me from making more than $25,000 a year for the rest of my life!

If I had been able to find work and continue to wait till age 66 or 70, I would have been okay financially. Now, I will have to continue to work even into my 80s or until I die. I am currently doing odd jobs. The work is not dependable, and I never know how much money I am going to have. I am in good health, but I have a foot that was damaged and cannot stand on my feet for more than three to four hours straight at a time.

I feel hopeless to be able to have a life where I do not struggle every month. My parents and husband died, I have no children, no brothers, sisters or relatives alive to help me. I need to be working and saving money for when I can’t work any longer, but the restrictions are overwhelming. Any help would be appreciated.

Phil Moeller: Sherry, I know that nothing I say can take away what must be a crushing sense that everything is stacked against you. But I can say that things may not be as bad as you think.

Normal retirement benefits cannot be started before the age of 62, whereas survivor benefits can begin at age 60. The fact that your benefits began at age 60 leads me to think that you are receiving a survivor benefit and that you can later switch to your own retirement benefit. You can contact Social Security to confirm this.

If you started taking a widow’s benefit at age 60, you should still be able to switch to your higher retirement benefit at age 70. Under Social Security rules, a person who takes a survivor (widow) benefit can defer their own retirement benefit, allowing it to grow until the age of 70, when it reaches its maximum value.

Under Social Security rules, a person who takes a survivor benefit can defer their own retirement benefit.

I don’t know if your retirement benefit would be higher than your survivor benefit. But you can find out by opening a My Social Security account online. This will let you see your formal Social Security earnings record, including projections of your benefits at different claiming ages.

As far as limits on your earnings are concerned, someone gave you bad information. It is true that your Social Security benefits may be reduced because of outside wage earnings. But any reductions caused by what’s known as Social Security’s earnings test will disappear when you reach your full retirement age. At that time, there will be no reduction in your Social Security benefits due to income from work.

Best of luck! Please let me know how things turn out.